2024 (6) TMI 703 - HC - Indian Laws

Dishonour of Cheque - legally enforceable debt or not - debt on account of a default alleged to have been committed in the payment of chit - HELD THAT - A careful perusal of the various documents produced by the appellant in the respective complaints against the respondents show that, but for the account statement for the said period, there is no other material to show that there is a default committed by the respondents. Further, there is also no material to show that the appellant had called upon the respondents to pay the said sum towards the chit default by giving the requisite details with regard to the non-payment of monthly chits by the respondents. In the case on hand, it is the case of the respondents that the cheques, which are the subject matter of the present appeals/petitions, were not given for the discharge of a legally enforceable debt, which has been accepted by the courts below on the ground that neither the appellant has proved that the cheques were given for the purpose of discharging a legally enforceable debt nor any materials have been placed by the appellant to show that there existed a legally enforceable debt towards which the cheques in issue were given. Without the appellant discharging his share u/s 138, the appellant cannot fall back on Section 139 to show that the presumption would have to be given to the appellant and the ball would have to be placed in the court of the respondents to prove that the cheques were not given towards the discharge of a legally enforceable debt or other liability. The appellant ought to discharge their burden by giving the requisite details with regard to the statement of account and all the other details, which have been noted above and without giving the aforesaid details, placing a cheque, which is alleged to have been dishonoured, which is alleged to have been given by the respondents cannot be the basis to hold that a case u/s 138 of the Act is made out. The whole case of the respondents is on the ground that they dispute the amount shown by the appellant and that the cheque, which was given for security purpose was misused by the appellant and, therefore, the amount having not been established to be a legally enforceable debt, the dishonour of the cheque would not attract the wrath of Section 138 of the Act. Therefore, the aforesaid decision also does not in any way aid the appellant - If the appellant is able to provide all the details and place materials to establish the same, then there would be no impediment for the court below to look into the issue u/s 138 of the Act. Without placing the aforesaid materials, it would not be justified for this Court to interfere with the well considered orders passed by the courts below in the respective petitions. The impugned orders passed by the respective courts in the petitions does not deserve interference and the same stands affirmed - Appeal dismissed.

Summary

Issues Involved:
1. Whether the complaint u/s 138 of the Negotiable Instruments Act can be maintained without establishing a legally enforceable debt.
2. Whether the cheques issued by the respondents were for the discharge of a legally enforceable debt or merely as security.
3. Whether the appellant provided sufficient evidence to prove the existence of a legally enforceable debt.

Summary:

Issue 1: Maintenance of Complaint u/s 138 Without Establishing Legally Enforceable Debt
The court examined whether a complaint could be maintained u/s 138 of the Negotiable Instruments Act without establishing that the dishonoured cheque was for a legally enforceable debt. The court noted that u/s 138, the cheque must be for the discharge of a legally enforceable debt or liability. The appellant failed to provide sufficient evidence to prove that the cheques were issued for such a debt. The court emphasized that the appellant must provide details like the statement of account, payment and receipt details, and the defaulted amounts to establish the existence of a legally enforceable debt.

Issue 2: Purpose of Issued Cheques
The respondents contended that the cheques were issued as security and not for the discharge of a legally enforceable debt. The court found that the appellant did not provide adequate evidence to counter this claim. The court highlighted that the appellant did not produce materials such as calculation statements, account statements, or demand notices to prove that the cheques were issued for the discharge of a legally enforceable debt. The court upheld the lower court's finding that the cheques were not issued for the discharge of a legally enforceable debt.

Issue 3: Evidence of Legally Enforceable Debt
The court scrutinized the evidence provided by the appellant and found it insufficient. The appellant failed to produce necessary documents like account statements and demand notices that could establish the existence of a legally enforceable debt. The court reiterated that without such evidence, the appellant could not rely on the presumption u/s 139 of the Act. The court concluded that the appellant did not discharge its burden of proving the existence of a legally enforceable debt.

Conclusion:
The court dismissed the appeals and petitions seeking leave to file appeals, affirming the lower court's orders. The court granted liberty to the appellant to provide detailed evidence, such as statements of account and payment details, to establish the existence of a legally enforceable debt. If the appellant can provide such evidence, the court below may reconsider the issue u/s 138 of the Act.